If you believe all the negative publicity that surrounds logbook loans you might be surprised that there are any companies left in business in the industry.
Logbook loans don’t have a great name, but then neither do Payday loans in the UK either, however people are still using both forms of finance readily across the country.
If you search for logbook loans on a review site such as Trustpilot you will come across businesses such as Varooma that have great ratings because they have high customer satisfaction. Hundreds of people are saying that they took out a logbook loan and were happy with the service. A far cry from what you might read in the press about V5 loans.
However there is some seriousness to the matter, despite the good reviews it still seems that poor tactics are still used by some lenders to intimidate borrowers and make extra money. It is a shame that these companies still exist because it’s an outdated way of doing business and in the long term won’t do them any good.
The Financial Conduct Authority has taken charge of the industries’ regulation and will come down hard on any lenders not sticking to their guidelines. It is now a no win situation for these companies, some have a very bad reputation already and following regulation they will have to either cease trading altogether or pay a large fine.
Logbook loans generally only become bad when people borrow more than they can afford to pay back. In a smaller way it is similar to the credit crunch situation in 2008 when mortgages had been handed out to people without assessing their ability to pay back the loans. In those cases it was the banks as well as the customers that suffered, with V5 loans it seems it is just the customers because they have to put up with their cars being repossessed. Below is an interesting video about credit ratings which are a cause of so many people seeking logbook loans.
If someone borrows using a logbook loan and pays it back early without incurring lots of interest they are not getting a bad deal at all, in fact it can be quite a good deal because they may not have been able to secure the money from anywhere else.
It takes a website such as Logbook Loan Advice to independently set out all the options consumers have in the industry. By making it clear that there are different lenders who all have different rates and different ways of doing business puts the consumer in more of a position of power than ever before.
There are plenty of comparison sites out there for other types of personal finance so it was about time that consumers were able to compare all lenders on an equal basis.